Summary
using "fraudulent inducement" and "fraudulent misrepresentation" interchangeably
Summary of this case from McIrvin v. West Side Unlimited Corp.Opinion
No. 3-904 / 03-0724
Filed March 24, 2004
Appeal from the Iowa District Court for Bremer County, Bryan H. McKinley, Judge.
Pauline Arns appeals and Thomas Arns cross-appeals from a district court ruling that satisfied certain of Thomas's support and property settlement obligations, but declined to terminate his alimony obligation. AFFIRMED IN PART, REVERSED IN PART, AND REMANDED ON APPEAL; AFFIRMED ON CROSS-APPEAL.
John Hines of Dutton, Braun, Staack, Hellman, P.L.C., Waterloo, for appellant.
Steven Egli of Hagemann, Goeke, Egli Thalacker, Waverly, for appellee.
Heard by Zimmer, P.J., and Miller and Hecht, JJ.
Pauline Arns appeals from a district court ruling that found certain property and support obligations owed by her former husband, Thomas Arns, had been satisfied during the period of time the parties were reconciled, and that calculated the amount of Thomas's remaining, accrued property settlement obligation. Thomas cross-appeals from the portions of the court's ruling that denied his request to terminate his alimony obligation to Pauline, and to satisfy in full his property settlement obligation. We conclude the district court erred when it did not account for interest due and owing on Thomas's remaining property settlement obligation. Accordingly, we reverse that particular portion of the district court's ruling and remand for calculation of the correct interest amounts. The remainder of the district court's decision is affirmed.
Background Facts and Proceedings.
Thomas and Pauline Arns married in 1979, and had three children. Their marriage was dissolved pursuant to a stipulation on January 28, 1991. At the time each party earned approximately $20,000 per year: Pauline as a full-time police dispatcher, and Thomas as a full-time farmer. The stipulation required Thomas to pay $600 per month in child support, or $200 per child, as well as, if and when applicable, a $100 per month per child post-secondary education subsidy. In exchange for Pauline's interest in the parties' real estate — an eighty-acre farm the couple had been purchasing on contract — Pauline was to receive $15,000, to be paid in installments of $1,500 per year over ten years. The decree neither provided that unpaid principal would draw interest nor provided that it would not draw interest. Thomas was also required to pay Pauline $400 per month in permanent alimony. It appears this alimony award was in lieu of a larger property settlement in Pauline's favor. All payments were to be made directly to Pauline.
Although Thomas had in fact agreed to pay $600 per month in alimony, he requested the lower amount be included in the decree as he was concerned about the impact the $1,200 per month in obligations would have on his ability to obtain financing for his farm operation.
Following the decree Thomas paid his monthly child support and alimony obligations. He also made the first $1,500 property settlement payment. The parties dispute whether Thomas made the second property settlement payment.
Pursuant to the parties' verbal agreement, Thomas paid $600 per month in alimony.
Thomas and Pauline reconciled in late 1992. In January 1993 the parties and their children began living together as a family, and Thomas and Pauline agreed Thomas would stop paying his obligations under the decree. In addition, to assist Thomas in purchasing the family farm, Pauline signed a January 18, 1993 satisfaction of all child support, alimony and property settlement payments due up through that date, and a release of certain real estate from the lien for sums due her under the decree. At the time the satisfaction was executed two of the ten property settlement installment payments had come due.
Although they never remarried, Thomas and Pauline remained reconciled for approximately eight years. During that time Thomas continued his farming operation, and Pauline continued to work outside of the home. Pauline and the children received financial support from Thomas in the form of lodging, utilities, vehicle payments, and some living expenses. In turn Pauline made contributions to the family home, and she and the children made non-monetary contributions to the farm operation.
By the mid-1990s the farm operation began to experience serious financial problems. In 1999 Thomas obtained a part-time job at Schneider Milling. In June of that year, again to assist Thomas with farm financing, Pauline signed a release stating Thomas's child support and alimony payments had been satisfied in full as of April 1998. However, the farm finances continued to decline, and in October 2000 Thomas decided to stop farming. He moved off of the farm the following month, and immediately resumed his child support and alimony payments.
Thomas initially paid $600 per month in alimony but, after obtaining counsel, reduced his payment to the $400 per month listed in the decree.
In May 2002 Thomas filed a petition to modify the dissolution decree, requesting that his alimony obligation be terminated, and that the court declare he had, as of the date of filing, fully satisfied all his child support, alimony, and property settlement obligations. At that time both Thomas and Pauline were employed on a full time basis. Pauline worked at the county jail earning $16.50 per hour, with a gross annual salary of approximately $39,000. Thomas worked at Schneider Milling, earning $11.00 per hour, for a base salary of $22,880. However, as Thomas worked large amounts of overtime, which was compensated at a rate of $16.50 per hour, his gross annual salary was approximately $46,000.
In its February 2003 ruling, following a November 2002 hearing, the district court denied Thomas's request to terminate his alimony obligation, concluding he had failed to establish a substantial change in circumstances. The court also declined to find that Thomas was relieved of his obligation to make the eight property settlement payments that came due after Pauline signed the 1993 release. The court did, however, grant Thomas's request to declare that his child support and alimony obligations had been satisfied from the time of the original decree through the parties' November 2000 separation.
The court then calculated the amount of child and spousal support payments due under the decree between the November 2000 separation and the November 2002 hearing, and compared them to the support payments Thomas actually made during that time. Concluding Thomas had overpaid these obligations by $8,277.70, the court set the overage off against his remaining $12,000 property settlement obligation, and found Thomas had a net obligation due and owing to Pauline of $3,722.30. In a post-ruling order the court also set Thomas's child support obligation for the one child who remained eligible for support at $376 per month. Assuming Thomas would work more limited overtime hours in the future, the court concluded Thomas's actual income was approximately $33,400, rather than $46,000.
Pauline appeals. She contends Thomas did not establish that his child support and alimony obligations had been satisfied during the period of reconciliation, that the 1993 release did not relieve Thomas of his obligation to pay the second of the ten property settlement installments, and that she was entitled to an award of interest on Thomas's remaining property settlement obligation. Thomas cross-appeals, asserting the district court should have declared that the entirety of his property settlement obligation had been satisfied, and found that there had been a substantial change in circumstances warranting termination of his alimony obligation to Pauline.
Pauline also claims Thomas should not be allowed a credit for any support he paid from November 2000 to November 2002 that was in excess of his obligations under the original decree. She contends that, as they were voluntary over-payments made directly to a former spouse, they are to be deemed gifts. Although we could reject this claim on its merits, we note Pauline has failed to cite any authority in support of her assertion, and thus has waived the issue. Iowa R. App. P. 6.14(1)( c).
Scope of Review .
Our scope of review is de novo. Iowa R. App. P. 6.4. Although not bound by the district court's factual findings, we give them weight, especially when assessing witness credibility. Iowa R. App. P. 6.14(6)( g).
Satisfaction of Support Obligations .
In finding that Thomas's child support and alimony obligations had been satisfied up through the date of the parties' November 2000 separation, the district court concluded the doctrine of promissory estoppel should be applied to preclude Pauline from denying the satisfaction of those amounts. Pauline argues Thomas did not establish the elements of promissory estoppel. We cannot agree.
Thomas bore the burden of establishing (1) a clear and definite oral agreement between the parties; (2) that he acted to his detriment in reliance upon the agreement; and (3) the equities entitle Thomas to the relief he seeks. In re Marriage of Harvey, 523 N.W.2d 755, 756-57 (Iowa 1994). We, like the district court, find all the elements to be met in this case.
Pauline concedes she agreed Thomas could stop making support payments during the period of reconciliation, but contends the agreement was only to delay the receipt of, rather than to forgo, the payments. We, like the district court, conclude that the record, including Pauline's own testimony, indicates she did in fact agree to forgo the payments in order to assist Thomas in obtaining better farm financing.
Alternatively, Pauline argues the agreement was invalid as it was fraudulently induced by Thomas's false promises to alter his personal behavior. The district court was not persuaded by this argument:
[T]hese two people voluntarily elected to cohabitate. Pauline was not forced into the situation nor was she forced to remain and had the free will to leave at any time. Considering her testimony, the Court believes that Pauline must be responsible for her actions and cannot now at some later date portray herself as a victim to a living arrangement that she voluntarily chose and maintained for a period of eight years.
We agree with the court's analysis, and find the record falls far short of demonstrating fraudulent misrepresentation on the part of Thomas. See City of McGregor v. Janett, 546 N.W.2d 616, 619 (Iowa 1996) ("A statement of intent to perform a future act is actionable only when spoken with the existing intention not to perform.").
The evidence further demonstrates that Thomas relied on his agreement with Pauline in providing significant support for both Pauline and the children during the reconciliation period. Although this support was primarily derived from the farming operation, and both Pauline and the children did contribute to that operation, the record indicates the farm income was primarily generated through Thomas's efforts. Given that Thomas did provide support to Pauline and the children during the reconciliation in an amount that was at least equal to what was due under the decree during this period, equity dictates that Thomas is entitled to the satisfaction through the November 2000 separation.
This is particularly true in regard to Thomas's child support obligation, as only one of the parties' three children remains eligible for support. If Thomas were required to pay eight years of past child support to Pauline, a substantial part of that support would be for periods of time when one or more of the children were no longer eligible for support. Equity dictates against such a result. See Harvey, 523 N.W.2d at 757.
Pauline contends that, even if estoppel was established, application of the doctrine would violate Iowa Code section 598.22A (2001), which limits how and when a judicial satisfaction of child support may be entered. Provisions like those in section 598.22A were enacted to promote the clear setting and effective enforcement of child support obligations, and "spare the courts from the impossible task of separating fact from fiction in claims of the parties' private understandings." Harvey, 523 N.W.2d at 756. However, to apply the statute to bar satisfaction would, in this case, reward the very type of behavior the legislature has sought to avoid. The district court correctly applied the doctrine of promissory estoppel in finding that Thomas had fully satisfied his child support and alimony obligations due from the time of the original decree until the November 2000 separation. See In re Marriage of Yanda, 528 N.W.2d 642, 644-45 (Iowa Ct.App. 1994). Amount of Thomas's Remaining Property Award Obligation.
Pauline raises the related issue of whether the 1999 satisfaction was enforceable, because it failed to meet the oath requirements of Iowa Code § 598.22A. As we have already determined Thomas established the elements of promissory estoppel for child support and alimony payments up to November 2000, we need not decide the issue.
Pauline claims Thomas owes $13,500, rather than $12,000, in outstanding property settlement payments. She contends that, in signing the January 1993 release, she intended to release only the first, paid settlement installment, and not the second allegedly unpaid installment. As an initial matter we note the district court never specifically determined whether the second installment had been paid by Thomas. However, even if we were to find that Thomas had not in fact made the second payment, Pauline's claim would not succeed.
Although Pauline contends the 1993 satisfaction and release is ambiguously worded, we cannot agree. The document clearly and unequivocally satisfies "all child support payments, alimony payments, and property settlement payments due to [Pauline] arising out of the Stipulation incorporated in the Dissolution Decree herein to and through the 18th day of January, 1993. . . ." Where a document is unambiguous, intent is determined by the words of the document itself. Hofmeyer v. Iowa Dist. Court, 640 N.W.2d 225, 228 (Iowa 2001). Nowhere on the face of the release and satisfaction is there any indication that Pauline or Thomas intended the satisfaction to address the first, but not the second installment payment. Although we may consult extrinsic evidence when interpreting an unambiguous instrument, id., Pauline points to no evidence in the record that would support her characterization of parties' intent at the time the satisfaction was signed. Moreover, Pauline's failure to cite authority in support of her claim waives the issue. See Iowa R. App. P. 6.14(1)( c).
Thomas contends that, just as he did in regard to his child support and alimony obligations, he established the doctrine of promissory estoppel should be applied to satisfy the entirety of his property settlement obligation to Pauline. This claim is without merit. Contrary to the child support and alimony payments, Thomas has not established that he detrimentally relied on any agreement with Pauline to forgo her property settlement payments, or that a balancing of the equities dictates satisfaction of this obligation. Even though the amount of support Thomas provided to Pauline and the children during the reconciliation may have exceeded the amount of his support obligations under the original decree, any excess was not so substantial as to compensate Pauline for the remaining amount owed under the property settlement. We conclude the district court correctly set the amount of Thomas's remaining property settlement obligation at $12,000.
Interest on Property Settlement .
Pauline claims she was due interest on Thomas's remaining $12,000 property settlement obligation. We agree. Fixed awards of money for property settlement draw interest at the statutory rate even though the judgment makes no reference to the matter of interest. In re Marriage of Dunn, 455 N.W.2d 923, 925 (Iowa 1990); Arnold v. Arnold, 258 Iowa 850, 854-55, 140 N.W.2d 874, 877 (1966) (citing Iowa Code § 535.3 (1962)). This is because a property award in a dissolution decree has the essential qualities of a judgment. Hunt v. Kinney, 478 N.W.2d 624, 626 (Iowa 1991); Arnold, 258 Iowa at 854, 140 N.W.2d at 877. Interest is payable from the date a judgment becomes due. Hunt, 478 N.W.2d at 626. Accordingly, interest should have been calculated, as to each of the eight remaining $1,500 installment payments, from the date each individual payment came due.
We therefore reverse the portion of the district court's ruling that set Thomas's net property settlement obligation at $3,722.30. We remand this matter to the district court for a recalculation of the net amount, providing for an award of interest as to each of the eight remaining installment payments from the date each became due and owing. However, under Iowa Code section 535.3 that interest rate is not the ten percent per annum asserted by Pauline, but is to be calculated pursuant to section 668.13. Iowa Code § 535.3(1). Alimony .
Under Iowa Code section 535.3, the ten percent interest rate is reserved for workers' compensation proceedings, and child, spousal and medical support payments. The property settlement installment payments at issue in this matter would fall under the remaining category of "all money due on judgments and decrees of courts," interest for which is calculated pursuant to section 668.13. Id.
Finally, we address Thomas's claim that he did in fact establish a substantial change in circumstances warranting termination of his alimony obligation. Thomas asserts that unanticipated changes in the farming industry and his physical condition have left him with crushing debt and an income insufficient to meet both a $376 per month child support obligation and a $400 per month alimony obligation. He also asserts that, given Pauline's current salary, she no longer requires the support.
The burden is upon Thomas to show, by a preponderance of the evidence, that a substantial and material change in circumstances, of a more or less permanent or continuous nature, occurred after the entry of the original decree. In re Marriage of Rietz, 585 N.W.2d 226, 229 (Iowa 1998). The change must not have been within the contemplation of the court when the original decree was entered. Id. Moreover, "it must appear that continued enforcement of the original decree would, as a result of the changed conditions, result in positive wrong or injustice" Id. We find Thomas has failed in his burden for several reasons.
The steady increase in Pauline's income was not a matter outside of the district court's contemplation at the time the original decree was entered and, standing alone, is not a substantial and material change. We also reject Thomas's assertion that there has been a substantial decrease to his earning capacity. Rather, we agree with the district court's determination that, despite the poor financial condition of the farming operation, Thomas's earning capacity has increased, rather than decreased, since the time the original decree was entered. This is true whether we consider Thomas's recent income, which was generated in part through large amounts of overtime, or like the district court, we consider Thomas's physical condition in setting a more limited earning capacity. Even bearing in mind Thomas's debt, we cannot conclude continued enforcement of his alimony obligation would result in a positive wrong or injustice. In fact, given that the alimony award was as least partially made in lieu of a larger property settlement in Pauline's favor, we conclude it would actually work a positive wrong or injustice to Pauline to terminate the alimony obligation.
Each party shall pay one-half of the costs of this appeal.